AT,T buys Leap Wireless for $1.2 billion / Leap Wireless

by Roger Yu, USA TODAY

by Roger Yu, USA TODAY

After failing to land T-Mobile US, AT&T said Friday it agreed to buy prepaid wireless provider Leap Wireless International for $15 per share in cash.

The nation's second largest carrier will pay about $1.2 billion for all of Leap's stock and wireless properties, including licenses, network assets, retail stores and about 5 million subscribers.

Shares of Leap, which is based in San Diego and sells its wireless service through the Cricket brand, rose 2.5% to end Friday at $7.98 before the news was released.

In after-hours trading, Leap shares more than doubled to $17.31.

The deal allows AT&T to quickly build its presence in the increasingly lucrative pre-paid market. AT&T plans to retain the Cricket brand name and will open up its fastest data network -- 4G LTE -- to Cricket customers. It also wants to expand Cricket's presence in more U.S. cities.

Once the deal is completed, AT&T will tap Leap's unused spectrum â?? which covers 41 million people â?? to expand its LTE network, it said.

"The combined company will have the financial resources, scale and spectrum to better compete with other major national providers for customers interested in low-cost pre-paid service," AT&T said in a statement.

Leap's network covers customers in 35 U.S. states. As of the end of the first quarter, it had 4,63 million customers, down from 5.17 million in the year-earlier period. Its first quarter revenue fell 4.3% to $789.9 million. As of April 15, Leap had $2.8 billion of net debt.

The deal is subject to review by the Federal Communications Commission and the Department of Justice. AT&T expects the transaction to close in six to nine months.

Owners of about 29.8% of Leap's outstanding shares have agreed to vote in favor of the transaction, AT&T said.

SoftBank, a Japanese wireless carrier, las month completed buying Sprint Nextel for $21.6 billion. T-Mobile, the fourth largest carrier in the U.S., also completed its acquisition of pre-paid carrier MetroPCS earlier this year.